March 21 (Bloomberg) -- China anticipates a breakthrough in
energy talks during President Xi Jinping’s visit to Moscow this
week, an achievement that may strengthen ties between neighbors
wary of U.S. motives on issues from Iran to Asia policy.

China wants to sign an agreement on a natural gas pipeline
during Xi’s three-day trip starting tomorrow, Vice Foreign
Minister Cheng Guoping said yesterday at a briefing in Beijing.
The visit will be the first state trip abroad for Xi since he
was appointed Communist Party chief in November and president
last week, the official Xinhua News Agency said.

A deal for the pipeline would open a new market for Russian
supplies as demand in Europe weakens. That and other agreements
during Xi’s visit may boost relations as Russia and China seek
stronger alliances to counter what they see as U.S. efforts to
exert more influence in the Asia-Pacific and the Middle East.

“Energy cooperation is the crown jewel of China and Russia
cooperation,” said Li Lifan, deputy director at the Center of
Russia and Central Asia Studies at Shanghai Academy of Social
Sciences. “The mutual trust built upon energy cooperation could
quickly spread to other areas.”

BRICS Gathering

The state visit to Russia is part of a trip in which Xi
will later head to a BRICS summit in South Africa. A deal on a
gas pipeline would bring to fruition a decade of talks to supply
as much as 68 billion cubic meters of gas a year to the world’s
second-biggest economy.

“We will have some outcomes related to energy, investment
and major projects of strategic importance,” Cheng said. “We
expect some breakthrough on these pragmatic cooperation fields.’

Cheng struck a different tone than OAO Gazprom Chairman
Viktor Zubkov, who said March 19 that talks with China are
difficult because of disagreements over price for gas China
wants to buy. Gazprom is the world’s biggest natural gas
producer.

Analysts including VTB Capital’s Dmitry Loukashov expressed
less optimism than Cheng about the possibility of a major deal.
In a note to clients yesterday, analysts led by Loukashov said
they don’t expect a final contract in the near future. VTB
Capital is the investment banking arm of Russia’s second-largest
state-owned lender.

China imported 42.5 billion cubic meters of natural gas,
including liquefied natural gas, in 2012, up almost a third from
a year ago, according to a statement from National Development
and Reform Commission in January. China’s natural gas
consumption reached 147 billion cubic meters in 2012, NDRC said.

Companies and working groups from the two sides are having
“intensive discussions” in Moscow on transporting natural gas
and constructing a pipeline, Cheng said during yesterday’s
briefing.

During the trip, Xi and President Vladimir Putin may move
forward on defense-related deals for Russia to transfer
technology for aircraft and jet engines, according to a March 18
report from Washington’s Carnegie Endowment for International
Peace.

‘Strengthen Coordination’

China and Russia should “strengthen coordination in
international and regional affairs to safeguard world peace,
safety and stability,” Xi said in an interview, according to
the Xinhua News Agency.

Russia and Chinese interests have aligned at the United
Nations Security Council. Both are wary of the U.S. stance on
Syria’s conflict and Iran’s disputed nuclear program. Chinese
state media have expressed skepticism about U.S. President
Barack Obama’s pivot toward Asia, with Xinhua saying it showed
Washington’s “strategic mistrust” of Beijing.

Putin’s government has aspired to a “multipolar” world as
opposed to what it says is a unipolar one dominated by the U.S.

“This is the time to balance the U.S. ’rebalancing,’”
Shen Dingli, director of the Center for American Studies at
Fudan University in Shanghai, said yesterday by e-mail. “Among
all possible destinations that could be viewed to be able to
help China to achieve such balance, Russia is most appropriate
given its own power status and its strategic balancing with
America.”

U.S. Ties

While China may look to Russia, it’s also nurturing ties
with the Obama administration. Xi’s first guest as state
president was U.S. Treasury Secretary Jacob Lew, who met him
March 19. The two nations also came to an agreement on imposing
stricter sanctions over North Korea’s nuclear program.

In the meeting with Lew, Xi said the U.S. and Chinese
economies have a “seamless connection” and the relationship is
of great importance.

“In general, I believe that the US-China relationship is
better than what it appears,” Huang Jing, a political science
professor at the National University of Singapore, said
yesterday by e-mail.

Making Russia Xi’s first stop is an “easy choice” given
the two countries’ similar concerns about the U.S. and the fact
they have no major disputes, Taylor Fravel, a professor at the
Massachusetts Institute of Technology who studies China’s
relations with its neighbors, said yesterday by e-mail.

Putin visited China a month after regaining Russia’s
presidency last year, telling reporters that the two had lifted
Russian-Chinese cooperation “to unprecedented heights.”

Xi’s visit “fully shows the high level of importance
attached to China-Russia relations by the new central
leadership,” Cheng said. “Destabilizing factors and
uncertainties are on the increase. Hegemonic politics and new
interventionism are on the rise.”